Recent selling pressure on Ethereum (ETH) led to a drop reminiscent of the levels seen during the peak of 2021, yet the cryptocurrency managed to stay above the $3.5K mark.
CryptoQuant data reveals that ETH saw a monthly average sell-off of $400 million in negative net taker volume, rivaling the selling activity observed when the altcoin hit $4.8K in the previous cycle.
Recovery Potential at $3.5K Support
Despite this, experts suggest that ETH may still have room to grow in this cycle. Starting from late November, ETH has managed to stay above the crucial $3.5K support level, with the recent sharp decline coming to a halt at this point.
This solidifies $3.5K as an important short-term support level that could facilitate ETH’s upward movement.
Analyst Eugene Ah Sio echoed a similar sentiment but cautioned that breaching the $3.5K mark could negatively impact market sentiment towards ETH and the broader altcoin market.
Identifying significant support levels for major cryptocurrencies (BTC, ETH, SOL), Ah Sio stated,
“94k/3.5k/200. These are the levels I think market has established as key support levels. Lose this and all of a sudden holding alts in your pf don’t seem like a good idea anymore. Hold these levels and it’s still game on.”
Furthermore, the demand for US spot ETH ETFs remained robust, despite some holders opting for profit-taking. On December 10th, these products recorded daily inflows of $305.74M.
With twelve consecutive days of inflows, there is strong support for a rebound above $3.5K.
So, what are the potential price targets for ETH from this support level? Insights from Hyblock liquidation heatmap data offer some clues.
The current liquidation levels, indicating a concentration of leveraged positions, suggest that immediate upside targets include $3.69K and $3.72K, with additional goals set at $3.8K, $3.9K, and $4K.
These levels represent leveraged short positions that could drive prices up through a liquidity hunt. Given that leveraged positions around $3.5K have been utilized, the likelihood of ETH reaching these higher liquidity levels has increased.
On the downside, there are two more liquidity levels at $3.4K and $3.38K. If ETH falters, these could serve as crucial support points.